Tue, Apr 21, 2009 - Page 11 News List

Asian shares higher on Wen’s upbeat statement

WEN’S WORDS WORK WONDERS The Chinese premier’s positive assessment of the world’s third-largest economy helped Asian stock markets continue their six-week rally


Asian stocks edged higher yesterday as the Chinese premier’s positive assessment of the world’s third-largest economy helped soothe nerves ahead of key earnings reports from leading US companies.

Many Asian markets see-sawed before heading modestly higher, led by Hong Kong and Shanghai stocks after Chinese Premier Wen Jiabao (溫家寶) said on Saturday that the economy was faring “better than expected” as a massive stimulus package produces results.

Coupled with more pledges to pull the economy out its slump, the comments from Wen, also the nation’s top economic official, gave investors more reason to hope China will heal faster and help both Asian and overseas markets along the way.

Investors were also awaiting results that could test a growing belief that the world economy and banking system have turned a corner. Among the hundreds of US companies due to report are Bank of America, Coca-Cola, Microsoft, IBM and McDonald’s.

So far, rosier-than-expected earnings from financial giants like Citigroup and Goldman Sachs have buoyed optimism of a recovery and given further impetus to a six-week rally.

Still, with a number of markets already up more than 20 percent in less than two months, many are becoming wary of another bubble in the making and say any negative surprises could cause a bout of selling.

“Equities markets are beginning to be quite detached from the underlying economic fundamentals — once again,” said Kirby Daley, senior strategist at Newedge Group in Hong Kong. “The worst is far from over.”

As trading got under way in Europe, Britain’s FTSE 100 lost 0.6 percent, Germany’s DAX retreated 2 percent and France’s CAC-40 was off 1.7 percent. The euro fell against the US dollar to its lowest point since mid-March as traders anticipated another interest rate cut from the European Central Bank.

US futures pointed to a lower opening on Wall Street yesterday. Dow futures fell 79 points, or 1 percent, to 8,005 and S&P 500 futures slipped 10.3, or 1.2 percent, to 856.50.

Earlier in Asia, Japan’s Nikkei 225 stock average recouped morning losses to rise 17.17 points, or 0.2 percent, to 8,924.75, while South Korea also made up lost ground, rising 0.6 percent to 1,336.39.

In China, Shanghai’s key index added 2.1 percent to 2,557.46, while Hong Kong’s Hang Seng climbed 1 percent to 15,750.91.

Wen said the economy appeared to be bouncing back, with industrial output, consumer spending and factory investment on the rise. Chinese investors were also encouraged after a regulator said bank lending this year would not be limited to the 5 trillion yuan (US$731 billion) the government has cited as a goal. A flood of liquidity in the market has been pushing up stocks since the start of the year.

Chinese airlines were among the day’s best performers after tickets prices were raised yesterday following reports of heavy losses for state-owned carriers last year.

In Japan, steelmakers strengthened after analysts issued upbeat appraisals of the sector and said producers may see lower price cuts from automakers. Nippon Steel, the country’s leading producer, advanced 4.3 percent.

Gains in Japan’s broader market were capped by losses by several companies, including Toshiba. The giant chipmaker — which projected a wider-than-expected fiscal-year loss, warned of contract job cuts and may need to raise fresh capital — dropped 4.8 percent.

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